If you look up karma online, you'll find several similar definitions. Actions determining future state, the law of cause and effect. You'd also find synonyms of destiny, fate, kismet, and predestination.
The idea behind karma is that for everything you do--it will be met with a reward or punishment for the universe. For example, someone winning the lottery may have ran into a burning building to save a buch of children (PLEASE for my sake, do not try this to win the lottery. I do not want to be held responsible for the death of anyone.).
Another, less crazy, example of karma is the show, My Name is Earl. The show is completely dedicated to the idea of karma. Earl, a not so good guy when the show starts, wins the lottery and is promptly looses his ticket. When he gets it back, a series of events happen making him realize he doesn't deserve the money he has won. He makes a list of all the bad things he's done in his life, and goes through trying to make up for them. Eventually he become a very likeable guy and is rewarded by the universe for his good deeds.
Karma would work well in a story about a hero, an epic especially. The character would be forced to make their decisions based on how they would be rewarded in the future. It could be used in a very long term way, or even short term. Passing up an opportunity to help someone in need, the hero may find himself lost. Not completing a quest, may eventually lead to them not getting to spend the rest of their life with their soul mate. And so on and so forth. Karma can have a very powerful effect.